The STP-C488 oncogene of herpesvirus saimiri has transforming activity independent of the rest of the viral genome. We now demonstrate that STP-C488 associates with cellular ras in transformed cells. Mutations that disrupted this association with ras disrupted the transforming ability of the STP-C488 oncogene. Binding assays showed that STP-C488 was capable of competing with raf-1 for binding to ras. Expression of STP-C488 activated the ras signaling pathway as evidenced by a 2-4 fold increase in the ratio of ras-GTP to ras-GDP and by the constitutive activation of MAP kinase. Consistent with an activation of signaling through ras, STP-C488 expression induced ras-dependent neurite outgrowth in PC12 cells. STP-C488 is the first virus-encoded protein shown to achieve oncogenic